sportsfinda

The age old idea of the big overwhelming the small is perfectly encapsulated in the idea of creating barriers to entry. In the world of finance, economics and the general marketplace, low level or small businesses have largely struggled when competing with well established multinational corporations. They simply do not have the same budget or human resources to compete with corporations that are directly or indirectly monopolising the market. In essence, isolating the smaller businesses and stopping them from growing at an appropriate level. Thus, resulting in some pretty consequential barriers to entry.

Types of barriers to entry

In order to fully understand barriers to entry and how they can be overcome, we must understand that there are a number of barriers to entry which largely vary in how they come about.

1. Government intervention

Firstly, a barrier of entry may arise due to government intervention. It is rather common that large firms within certain industries are likely to lobby governments into creating these barriers to entry. Industries heavily regulated by the government are usually the most difficult to break into, examples include commercial airlines, defense contractors and cable companies. These corporations justify their lobbying by saying that they are more likely to ‘uphold’ the integrity of an industry than small businesses, a largely unfounded idea which is arguably used to eliminate competition.

 

sportsfinda

 

2. A ‘natural’ barrier

Another example of a barrier to entry is simply a ‘natural’ barrier that has been formulated over many years. This usually takes place in brand bias and customers being ‘used to’ buying certain products and finding it difficult to look elsewhere for different options. Certain brands such as Nike or Kleenex are good examples of products that people have simply become accustomed to purchasing as their identities are entrenched in the lives of customers and consumers all around the globe.

sportsfinda

 

Methods of countering barriers to entry

So, how can we ensure the minimisation of barriers to entry and the opportunity to see an equal playing field as small business owners? Thankfully, there are a number of methods.

1. Be resourceful

Firstly, using everything at your disposal. Small businesses simply do not have the funds to match corporations head to head, but they have the luxury of thinking outside the box and not getting complacent. Large corporations may sell products that ‘fit’ a wide range of people, but small businesses can go above and beyond to understand their customers. Providing a service or product that is even better than the larger corporations and specified to the customer’s exact needs.

2. Power of the internet

In addition, small businesses MUST utilise the power of the internet. With the new age of globalisation and the internet, small businesses are able to network with as many people as they can get their hands on. Reaching out to people who are active on social media, and thereby connecting with customers. If a small business provides a quality service or product which is not provided by a large corporation, you can bet your bottom dollar, that with the power of the internet and social media the word will spread. Therefore, establishing an equal playing field with the wider market.

Hence, the necessity of overcoming and minimising the barriers to entry are extremely important. As they ensure that small businesses also have an opportunity to thrive and that big businesses do not continue enforcing a de facto monopoly over the market place. In other words minimising barriers to entry will stop ‘the rich from getting richer and the poor from getting poorer.’

    Leave a comment

    Your email address will not be published. Required fields are marked *